Will the future of Hanoi’s residential market shift due to demand for affordable housing?
Last week we looked at Ho Chi Miny City to assess the latest on this southern metropolis property market. This week we head up north to see how the economy is fairing for Hanoi and what impact the country’s foreign direct investment is having on business and subsequently the property market.
Figures released from the Ministry of Planning and Investment reveal that USD 1.74 billion of foreign direct investment was injected into Hanoi from January to August of this year. This is influencing various sectors of the property market. For example Savills have noted that the retail market is enjoying increased rents and occupancy. A similar story has emerged for the office market with a healthy surge of investment too.
One notable entrance to the market was Hanoi’s first Grade A serviced apartment project. Being well received to the market has helped contribute to healthy occupancy rates of just over 90 percent. The flurry of new serviced apartments is continuing with 1,885 new units in the pipeline. Consequently supply has increased 2 percent quarter-on-quarter but 10 percent year-on-year.
According to Savills at the same time the hotel sector welcomed 509 new rooms to the market. An increase of 5 percent quarter-on-quarter and 8 percent year-on-year. A total of 3.5 million international visitors descended upon Hanoi from January to September of this year. A hike of 24 percent year-on-year. However there was a natural decrease in occupancy rates due to it being low season.
The residential market saw a slight decrease in the amount of new apartments coming to the market. But this should be taken lightly as if compared on an annual basis supply has risen by 41 percent. The Grade B market continues to perform the best plus there is increased demand for affordable housing driving developers to look more closely at this sector. It will be interesting to see how this sentiment impacts the future of the residential market.
